Deutsche Telekom and Orange reportedly held talks over a mega merger

Reports claim Deutsche Telekom held talks about a mega merger with Orange last year, but the discussions fizzled out with the companies failing to agree on terms.

Le Monde claims the German and French telcos, each the biggest player in their respective domestic markets, held talks about a tie-up between May and September 2017, but have now ended.

Both companies, which hold large wholesale units in the form of ICSS and Orange International Carrier Services, would have some overlapping units, most notably in Poland, Slovakia and Romania.

Deutsche Telekom is valued at around €70 billion, according to Reuters, almost double the €40 billion valuation of its French counterpart, and this disparity in size was a key factor in the breakdown of talks, the report claims.

Each former incumbent is also partly-owned by its respective government, with Germany holding around 14.5% in direct stock and another 17.4% through the government bank KfW. The French government owns an estimated 15% stake in Orange.

According to a Reuters source, the talks have now definitively ended. The source said: “”It was studied by internal teams. But people quickly came to the conclusion that nothing could be done as Deutsche Telekom is far bigger than Orange. The matter is now closed.”

Both telecoms operators have a history of working together. In 2010 they teamed up to for a joint venture in the UK by combining their respective UK mobile operations, T-Mobile and Orange, to form EE. This was later sold to BT, with both operators holding an interest in the UK telco.